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With oil enriching Venezuela's coffers, President Hugo Chávez is lavishing billions on other countries, boosting his socialist-tinged image

COBIJA, Bolivia -- For two hours, President Evo Morales huddled in this jungle city with a dozen area mayors as they pitched public-works projects -- to be financed directly by Venezuelan President Hugo Chávez.

The Venezuelan and Cuban ambassadors to Bolivia flew here aboard the presidential jet to join the talks. The public was kept out.

After the money was divided up, Morales invited the media in and offered the mayors, one by one, a handshake and a Venezuelan embassy check for up to $150,000. In all, Venezuela gave about $1.5 million that day last November.

"I admire the Venezuelan government for showing this solidarity, " said a beaming Walter Valverde, mayor of the town of Puerto Rico, holding a $28,917 check to build a new hospital.

Flush with oil profits, Chávez is making an unprecedented effort to win the hearts and minds of citizens from Buenos Aires to Boston as he seeks to export socialism and challenge the United States' traditional role as the region's dominant player.

With Chávez's multibillion-dollar gusher of aid, Bolivia is building new schools. Argentina paid off its debt to the International Monetary Fund. Caribbean nations are receiving subsidized oil. Even the U.S. poor and American Indians have received discounted heating oil.

With Cuba's Fidel Castro sidelined by illness, Chávez, 53, has emerged as the region's most influential leader. Many in power have turned a blind eye to his foreign activism and increasingly authoritarian rule at home, much to the dismay of the United States and several Latin American nations.

But now he has reached a difficult juncture. His stunning defeat in a Dec. 2 vote on constitutional reforms shattered his image of invincibility. Domestic opponents are gathering steam, and some of Chávez's neighbors are voicing increased concern.

Observers throughout the region are scrutinizing Chávez's every move to determine how far he will push his vision of "21st century socialism." The concept is still fuzzy, but it is clearly a hard-left ideology that gives the state a much stronger role in the economy -- or maybe even a communist system like Cuba's.

The betting is that Chávez will continue to use his petrodollars to aggressively advance his cause, said Daniel Hellinger, a professor at Webster University outside St. Louis, who closely follows Venezuela.

"You can't just write this guy off, " Hellinger said. "He's impatient and intemperate. He has an outsized ambition and an outsized ego. . . . Chávez has a deep sense of mission, which is both dangerous and admirable. He sees himself as transforming Venezuela into a more modern and just society."

VENEZUELAN FOCUS

After grudgingly accepting his Dec. 2 defeat on changes that would have allowed him to seek reelection indefinitely and given him vast new powers, Chávez promised to move more cautiously, saying that his revolution's "main motor seized up, so we'll have to go by donkey instead."

But he insisted that his general direction was correct, and in a major speech two weeks ago, he called on hard-core supporters to push for removal of the constitutional barrier to his reelection. There seemed no doubt that they would oblige as they chanted an old Cuban slogan: "The people, united, can never be defeated."

Chávez also recently nationalized several foreign-owned mining operations and threatened to seize banks and even asphalt plants, which he accused of favoring exports over the domestic market.

The former army lieutenant colonel, who staged a failed coup in 1992 and was first elected president in 1998, often breaks into song in public, recites poetry during speeches, and plays pickup games of baseball with bodyguards and aides.

He relishes interviews with the likes of Barbara Walters, actor Danny Glover and supermodel Naomi Campbell, and grabbing the limelight when he travels abroad. During his trip to the United Nations in 2006, he called President Bush a "devil" and then headed to Harlem to tout his discounted-oil program before the world's media.

Many Venezuelans, especially the poor, retain enormous affection for Chávez.

"There's never been a president in the history of this country who has bothered to make sure old people get their pensions, " said Eroina González, 70.

As a retiree, said González, "I don't pay to use the subway -- I don't have to stand in line. That's good."

Chávez may owe much of his popularity to record income for Petróleos de Venezuela, the state oil company. The money has allowed him to offer jobs, free healthcare and cheap food to Venezuela's poor.

Poverty in Venezuela declined from 49 percent of the population in 1999 to 36.3 percent in 2006, according to government figures. Cuban doctors and teachers have played a crucial role in improving the quality of life, providing free medical care and education to slum dwellers as a form of repayment for the 90,000 to 100,000 barrels of petroleum that Venezuela ships daily to Cuba.

CONCENTRATED POWER

Chávez has been able to advance his goals because he controls virtually all power in the country. His supporters hold 160 of the 167 seats in Congress and 20 of the 24 state governorships. The judicial system, the Central Bank and the military rarely deviate from his line. And his presidential term runs until 2013 -- plenty of time to push his vision of socialism.

But Chávez also faces severe challenges at home. The Dec. 2 defeat gave political opponents their first major victory -- there is now talk of running one consensus opposition candidate for each spot in state and municipal elections late this year -- and highlighted Chávez's inability to forge the various parties that support him into a "Unified Party of the Left."

Chávez also seems to be facing discontent again within the military, which toppled him in a two-day coup in 2002. Retired Gen. Raúl Isaías Baduel, formerly Chávez's defense minister, has emerged as a key rival, and military commanders reportedly pushed a reluctant Chávez to accept the defeat.

Students have organized into a major opposition force, galvanized by Chávez's decision last year not to renew the operating license of RCTV, a television station known for its critical coverage of the president.

Crime is rampant -- experts say the number of homicides last year reached 16,000, roughly twice the number when Chávez took power in 1999 -- and the 22.5 percent inflation rate last year, the region's highest, eroded some of the gains enjoyed by the poor.

Basic foodstuffs are often unavailable, including milk, flour, cooking oil, black beans, eggs and chicken -- all items under government price controls. The government-owned Alba Caracas hotel -- formerly the Caracas Hilton -- often can't supply café con leche because there is no milk.

Corruption appears to be rising, but the government blames that on the persistence of "capitalist values" and has not prosecuted a single high-level official.

All of that has increasingly frustrated even Venezuelans who said they favor some of Chávez's ideas, like Arley Carro, 36.

"I don't agree with the stuff he's been doing lately, " Carro said as he took a break from polishing the windows on an aged Pontiac coupe. "Changing the currency . . , concerning himself with kidnaps in other countries. He should be dealing with things that are more important, like crime, health, education. He's just looking to make a name for himself."

Amid all of the domestic problems, Chávez has shown no sign of clipping his ambitions abroad, continuing to hand out foreign aid to fellow leftist leaders as part of his dream to create a bloc of Latin American and Caribbean countries that would counter U.S. influence in the region. He is still making frequent trips to neighboring countries, including a swing through Central America last week.

Just 10 days ago, in a scene broadcast live throughout Latin America, Chávez stood outside the Miraflores presidential palace and with warm hugs triumphantly welcomed two Colombian hostages whose freedom he negotiated with the leftist FARC guerrillas.

His call to recognize Colombian guerrillas as armies drew strong rebukes from Bogotá and Washington, however, and sparked a war of words between him and Colombian President Alvaro Uribe that underlined long-standing concerns among moderate and conservative Latin American leaders.

"The region shouldn't allow Hugo Chávez to export his authoritarian populism, " former Peruvian President Alejandro Toledo said in a telephone interview. "He's taking advantage of high levels of poverty and inequality. He takes advantage of the desperation of the poor."

But Chávez's billions in foreign aid -- the exact amount is difficult to calculate, but some estimates put pledges at more than $8 billion over the past year -- clearly have been buying friends.

In 2001, Chávez created Petrocaribe, a program that offers oil at subsidized prices to 16 Caribbean and Central American nations. The program paid dividends in 2006 when the 15-nation Caribbean Community backed Venezuela's bid for one of the 10 rotating seats on the U.N. Security Council, although it was ultimately unsuccessful.

"Venezuela's assistance to Dominica and CARICOM cannot go unnoticed, " Dominican Foreign Minister Charles Savarin said at the time in explaining his nation's support for Venezuela. The aid also extended the runway at Dominica's airport and provided asphalt, fuel storage tanks, university scholarships and $12 million for housing.

BOLIVIAN TIES

While Chávez has sought better relations with nearly every country in the region -- and has especially strong ties with Presidents Daniel Ortega of Nicaragua and Rafael Correa of Ecuador -- nowhere has he gained a deeper foothold than in Bolivia. Governed by Evo Morales, a leftist of Aymara indigenous descent who grew up herding sheep, it is South America's poorest country.

Chávez is sending subsidized diesel oil to Bolivia and spent at least $50 million last year in donations to the country's mayors and military units, according to Bolivian government officials.

Venezuelan money has also financed an archaeological dig; provided scholarships for 5,000 Bolivians to study in Venezuela; built roads and health clinics; financed the purchase of tractors, radio stations and fertilizer; and even allowed Bolivians to watch the 2006 World Cup soccer games.

"It's Chávez who is running Bolivia, " José Luis Paredes, governor of La Paz state, which includes the capital city, said in an interview. "Decisions come from Venezuela. . . . Morales executes them. Chávez is buying souls with petrodollars."

Morales' controversial effort to rewrite Bolivia's constitution comes straight from Chávez's playbook, said former President Jorge Quiroga, who lost the 2005 race to Morales and now leads Bolivia's main opposition party. The proposed changes include giving the government greater control over the economy and allowing Morales to seek reelection.

"[Chávez] is playing in about every country in Latin America, " Quiroga said in his La Paz office. "He has always seen himself as the reincarnation of Simón Bolívar" -- the Venezuelan who led the movement freeing a number of South American countries from Spanish control in the early 1800s.

Aníbal Romero, a professor of political theory at Metropolitan University in Caracas, said ordinary Venez- uelans want Chávez to focus instead on their day-to-day concerns about crime, dirty streets and the lack of food staples. But he predicted that Chávez will continue to pursue his grandiose dreams.

"He's messianic, " Romero said. "He cannot change. He cannot escape from his own shadow. He cannot stop being Chávez."

Miami Herald special correspondent Phil Gunson contributed to this report.

THE RISE OF HUGO CHAVEZ

Feb. 4, 1992 -- Chávez leads a failed military coup against elected President Carlos Andrés Pérez. He surrenders and is jailed.

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